Solar, Storage, and Smart Grid Transform Electric Utilities

by Feb 16, 2015Smart Cities

John Addison

John Addison is the author of two books - Save Gas, Save the Planet that details the future of transportation and Revenue Rocket about technology partner strategy. CNET, Clean Fleet Report, and Meeting of the Minds have published over 300 of his articles. Prior to being a writer and speaker, he was in partner and sales management for technology companies such as Sun Microsystems. Follow John on Twitter @soaringcities.

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Solar power installations grew 40 percent in the U.S. in 2014. Reports of record level renewable energy, energy storage, energy efficiency, and smart grid use were detailed by utilities and technology providers at the recent Distributech 2015 Conference, attended by over 11,000 professionals.

The old model of dirty power plants delivering electricity through an ancient grid to inefficient buildings is fading away. Itron CEO Philip Meese points out that both U.S. energy efficiency and GDP have doubled since 1993. Utilities that once brought online inefficient natural gas peakers now deliver energy stored in batteries. Peak demand is reduced by energy efficiency and also reduced with demand response (DR) signals sent across a smart grid to home thermostats, commercial air conditioners, and industrial processes.

Transmission and distribution losses cost $24 billion annually, Itron reports. Billions can be saved by  generating electricity near load centers. Utilities are upgrading to two-way smart grids that integrate distributed generation (DG), renewables, storage and micro grids. Renewables include wind, solar, hydro, bioenergy and geothermal.

Jeffrey Martin, CEO of SDG&E, the utility that serves 3.4 million people in the San Diego area, stated, “We will have more change in the next ten years than the last one hundred years for the utility industry.”

By year end, SDG&E will provide 33 percent of electricity from wind and solar; 67 percent from natural gas. Over 50,000 serviced homes have solar power, integrated with the SDG&E smart grid. The utility has major ambitions for grid storage; including a vehicle-to-grid pilot. Multiple microgrids operate within its service area, including one that meets most energy needs of UCSD, a university with 30,000 students. SDG&E provides a good example of where the utility industry is headed.

Solar and other Renewable Energy

Solar power has dropped 90% in cost over the last 7 years. Sitting at lunch at Distributech, I was told of Austin Energy recently receiving a solar bid at 5 cents/kWh, cheaper than natural gas, coal, and nuclear. In 2014, over 48 percent of new energy generation in the U.S. was from renewable energy.

According to the U.S. EIA Annual Energy Outlook of 2014, the U.S. had a total operating power generating capacity of approximately 1,031GW (including combined heat and power), including 166 GW of renewable capacity (including 88 GW of non-hydroelectric renewable capacity), 95 GW of nuclear capacity, 298 GW of coal-fired capacity, 92 GW of oil and natural gas (steam) capacity, and 218 GW of combined cycle capacity.


For decades, utilities have used pumped hydro to store electricity. Globally, 130 GW is stored by pumping water uphill when energy is cheap at deep off-peak, and then using gravity to let water fall through turbines at peak to generate electricity. But pumped hydro is not feasible in most places and can take a decade to permit and build. Only 22 GW of pumped hydro is used in the U.S.

Large battery storage continue to cost less and increase in use. A few years ago, lithium batteries cost $1,000 per kW. At Distributech, several estimated current costs at $400 per kW falling to $200 by 2020. Chet Lyons, Energy Strategy Group, predicts a 70 percent drop in the cost of large flow batteries over the next five years. He predicts that electric vehicles will grow to have five times the storage needs of the grid, creating a vehicle-to-grid (V2G) opportunity.

Ted Craver, CEO of Edison International, described their many initiatives in grid storage, renewable energy, and improving efficiency at every level. His subsidiary company, SCE which serves 14 million in Southern California, is meeting a growing demand for electricity even as it shuts down two large nuclear power plants. SCE is deploying multiple forms of large scale electricity storage. AES will install 100 MW of large-scale lithium battery storage in a 20-year power purchase agreement (PPA); Stem will manage 85 MW of distributed, behind the meter, lithium battery storage; Advanced Microgrid Solutions 50 MW; Ice Energy Holdings will install 25.6 MW of thermal storage, making ice off peak for use in cooling during peak. Expected success and ROI of these storage systems is likely to lead to more and larger orders.

According to a recent report from Navigant Research, the annual energy capacity of advanced batteries for utility-scale energy storage applications will grow from 412 megawatt-hours (MWh) in 2014 to more than 51,200 MWh in 2023, at a compound annual growth rate of 71 percent. Currently, lithium-ion batteries are winning the most grid storage battery awards, but next-generation chemistries, including ultracapacitors, lithium sulfur, solid electrolyte, magnesium ion, next-generation flow, and metal-air batteries, offer a combination of higher density and lower price points. According to a new report from Navigant Research, worldwide revenue from next-generation advanced batteries will grow from $182 million in 2014 to more than $9.4 billion in 2023.

Smart Grid

Over 40 million U.S. homes now have smart meters. Advanced metering infrastructure (AMI) have saved utilities millions in payroll for humans to walk streets checking meters and more millions in not rolling trucks to reset meters for new renters and homeowners. Beyond these early savings, AMI is showing even bigger investment potential in demand response and charging electric vehicles off-peak, instead of building new billion dollar power plants. We are just getting starting with the smart grid.

The internet is used by billions of people and soon by trillions of meters, sensors, controls, specialty processors, heating, ventilation, and even streetlights. Everywhere at Distributech was talk of the internet of things (IoT). Machines communicate with machines, respond, optimize and learn.

Current networks need to be upgraded. When we use a mobile app, it can take seconds for a response from the cloud, but that latency is unacceptable for a realtime response to a transformer fire, or managing the intermittency of a solar array. IoT communication is occurring over copper wires, Ethernet cables, fiber, Wi-Fi, mesh networks, landline and wireless networks. It is hampered with delays, bandwidth constraints, proprietary machine and building management systems, and incompatible protocols. The Tower of Babel needs to be upgraded to common protocols.

AT&T Vice President of Industrial IoT Solutions, Michael Troiano told me that AT&T recently launched the AT&T Cellular Communications Module (CCM) Reference Design, a new solution that makes it easier for utilities to roll out Industrial IoT Smart Grid Solutions.

AT&T has established an IoT Foundry in Plano, Texas, where customers, like GE, can develop and test prototypes and IoT networks.

Also, with the AT&T’s Global SIM, manufacturers can work directly with AT&T, instead of multiple regional wireless carriers, to launch, manage and rapidly scale deployments in most parts of the world.

Smart Cities, High Bandwidth, Low Latency

Smart cities, like Barcelona, look beyond their first project and implement a smart grid capable of future expansion. A city can pay for LED streetlights in months with saved labor and electricity costs. Add sensors, and further savings are achieved by not keeping lights on when no one is present. Smart networks become more valuable with EV charging. Mobility improves more with next bus applications and bus-to-traffic-light optimization. All these applications are just the beginning for smart cities in the future.

Kip Compton, CISCO Vice President IoT Systems and Software, talked to me about smart cities and several CISCO IoT initiatives. The city of Barcelona uses a Cisco Wi-FI Mesh network for communication between sensors, actuators, cameras, and technology. For example, sensors can communicate empty parking spaces to a database used by drivers to route to the nearest space. The Mesh network is extensible, so that a city could start with one application and add many over time.

Similarly, a utility could start with a network for AMI, and later add communication from pole transformers and EV charging units. The new Cisco Industrial Operations Kit and the Cisco Industrial Ethernet 4000 (IE 4000) Series Switches give cities, utilities, and major users more bandwidth, expandability, and lower latency for IoT applications. The Kit can manage up to 300 industrial routers and 250,000 RF Mesh endpoints with a single server. The 40 Gbps IE 4000 increases bandwidth for devices such as HD IP video cameras and increases the Power over Ethernet (PoE).

Smart and Sustainable

The United States is at a 60-year low in using coal power as inefficient plants are shut down thanks to improved efficiency of buildings, smart grids,  improved transmission and distribution, demand response programs, and increased renewable and natural gas capacity.

Residential and commercial users of electricity continue to be more efficient, sustainable, and save money. Millions of us will not only use electricity, we will produce, store and sell it. The grid also use big data and analytics to get smarter. Renewables, HVAC, lighting, and everything connected with IoT, will respond to realtime needs and price signals. Improved infrastructure, reliability, and a network of connected microgrids, will make it tougher for a storm or fire to take down the grid. With solar, storage, and smart grid, the future is brighter.


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1 Comment

  1. Indeed, John, Energy storage is one of the keystones to the new design. I believe Jeffrey Martin also said that SDG&E will never build another peaker plant. Behind the meter storage is the new exploding marketplace. However, unless the storage offers similar reduced savings, the utilities will experience a significantly reduced income from the savings rate payers are going to realize from the energy storage.

    The EIA numbers may not include the 50,000 roof top solar systems. Because of the “duck” curve, the new offpeak hours for charging EVs may also include middle of the day peak solar hours when the PUC tariffs catchup.

    Tom Bartley


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